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This is an EAc2 administrative clarification ruling regarding the sale of Renewable Energy Credits (RECs), valuation of on-site renewable energy generation, and separate ownership of the building and...

Inquiry

This is an EAc2 administrative clarification ruling regarding the sale of Renewable Energy Credits (RECs), valuation of on-site renewable energy generation, and separate ownership of the building and the on-site system.

Ruling

In a previous ruling (EAc2.1 CIR Ruling 12-23-02), it was determined that the sale of Renewable Energy Certificates (RECs) from an on-site renewable energy system was prohibited if that system received EAc2 points. This ruling is an update and supersedes the previous ruling. This ruling also establishes requirements to be met if the building owner does not also own the on-site renewable energy system. To encourage the greater development of on-site renewable energy systems, the sale of RECs is allowed from an on-site renewable energy system that claims credit under EAc2 if the building owner or energy system owner, either separately or acting together, meet the following conditions: 1. They purchase an equivalent number of RECs equal to 200% of the system's annual rated energy output each year from another source, which must be Green-e eligible. The system's rated output must reflect all system performance characteristics as well as actual local site conditions (e.g., climate, mounting location and angles, etc.). The rationale for the 1-for-2 ratio is that many states have set Renewable Portfolio Standards and in-state renewable energy targets that can be traded in the form of credits. These in-state RECs are typically more expensive to achieve and typically cost a lot more (e.g. $0.05/kWh for New England wind power vs. $0.01/kWh for RECs from West Texas or Dakotas wind). From an environmental and financial perspective these are not the same for a couple of reasons: a. Emissions reduction impacts other than CO2 are less in remote areas than in the congested areas in state where population is concentrated and where RECs are largely purchased. b. Distant renewable energy generation may be stranded by limited T&D capacity. Given that in-state RECs create more benefits than out-of-state RECs for non-CO2 impact but equal for CO2 impact, it was decided to allow in-state to be replaced by out-of-state on a 1 for 2 basis. This allows green building projects to capture the value of RECs created by on-site renewables while resulting in net reduction of CO2. 2. The seller of the on-site RECs must fully follow all established guidelines for the sale of RECs and not claim any of the environmental attributes for the on-site system. Example: An on-site solar system in New Jersey produces 100,000 solar kWh per year. These RECs may be sold provided the building or solar system owner purchases 200,000 kWh of Green-e eligible RECs to offset the sale of the on-site solar RECs. The offset purchase must occur for every year in which the on-site RECs are sold and are in addition to any RECs purchased to meet EAc6. To determine the value of the energy cost savings in EAc2 compliance calculations, the project team may include both of the following components, each of which must be listed separately in the credit documentation: 1) the cost of the energy no longer purchased from the supplier because of the on-site generation; and 2) the actual and/or fair market value of the RECs sold. If an on-site renewable energy system is owned and operated by an entity other then the building owner, the following must also occur to receive credit under EAc2: 1. There must be at least a 10-year contract for the purchase of the energy output by the building owner. 2. There must be clear documentation for accounting purposes whether the purchase includes the RECs or just the energy output. 3. If the purchase does not include the RECs, the building owner or energy system owner, either separately or acting together, must make the 200% offset REC purchase referenced above for at least 10 years. Applicable Internationally.

This is an EAc2 administrative clarification ruling regarding the sale of Renewable Energy Certificates (RECs), valuation of on-site renewable energy generation, and separate ownership of the building...

Inquiry

This is an EAc2 administrative clarification ruling regarding the sale of Renewable Energy Certificates (RECs), valuation of on-site renewable energy generation, and separate ownership of the building and the on-site system.

Ruling

In a previous ruling (EAc2.1 CIR Ruling 12-23-02), it was determined that the sale of Renewable Energy Certificates (RECs) from an on-site renewable energy system was prohibited if that system received EAc2 points. This ruling is an update and supersedes the previous ruling. This ruling also establishes requirements to be met if the building owner does not also own the on-site renewable energy system. To encourage the greater development of on-site renewable energy systems, the sale of RECs is allowed from an on-site renewable energy system that claims credit under EAc2 if the building owner or energy system owner, either separately or acting together, meet the following conditions: 1. They purchase an equivalent number of RECs equal to 200% of the system's annual rated energy output each year from another source, which must be Green-e eligible. The system's rated output must reflect all system performance characteristics as well as actual local site conditions (e.g., climate, mounting location and angles, etc.). The rationale for the 1-for-2 ratio is that many states have set Renewable Portfolio Standards and in-state renewable energy targets that can be traded in the form of credits. These in-state RECs are typically more expensive to achieve and typically cost a lot more (e.g. $0.05/kWh for New England wind power vs. $0.01/kWh for RECs from West Texas or Dakotas wind). From an environmental and financial perspective these are not the same for a couple of reasons: a. Emissions reduction impacts other than CO2 are less in remote areas than in the congested areas in state where population is concentrated and where RECs are largely purchased. b. Distant renewable energy generation may be stranded by limited T&D capacity. Given that in-state RECs create more benefits than out-of-state RECs for non-CO2 impact but equal for CO2 impact, it was decided to allow in-state to be replaced by out-of-state on a 1 for 2 basis. This allows green building projects to capture the value of RECs created by on-site renewables while resulting in net reduction of CO2. 2. The seller of the on-site RECs must fully follow all established guidelines for the sale of RECs and not claim any of the environmental attributes for the on-site system. Example: An on-site solar system in New Jersey produces 100,000 solar kWh per year. These RECs may be sold provided the building or solar system owner purchases 200,000 kWh of Green-e eligible RECs to offset the sale of the on-site solar RECs. The offset purchase must occur for every year in which the on-site RECs are sold and are in addition to any RECs purchased to meet EAc6. To determine the value of the energy cost savings in EAc2 compliance calculations, the project team may include both of the following components, each of which must be listed separately in the credit documentation: 1) the cost of the energy no longer purchased from the supplier because of the on-site generation; and 2) the actual and/or fair market value of the RECs sold. If an on-site renewable energy system is owned and operated by an entity other then the building owner, the following must also occur to receive credit under EAc2: 1. There must be at least a 10-year contract for the purchase of the energy output by the building owner. 2. There must be clear documentation for accounting purposes whether the purchase includes the RECs or just the energy output. 3. If the purchase does not include the RECs, the building owner or energy system owner, either separately or acting together, must make the 200% offset REC purchase referenced above for at least 10 years. Applicable Internationally.

The mechanical systems for this project are geothermal in nature. Water is extracted from a 250' deep well drilled into quartzite bedrock and extracted at approximately 51

Inquiry

The mechanical systems for this project are geothermal in nature. Water is extracted from a 250' deep well drilled into quartzite bedrock and extracted at approximately 51

Ruling

The system as described in the CIR is a combined passive geothermal heat exchange / ground source heat pump system. Per the v2.1 Reference Guide (pages 155 and 157) these types of systems do not qualify for points under this category because they do not generate energy. In general, environmental heat sources and sinks with a low temperature difference relative to room air conditions are not considered renewable energy sources in EAc2 in LEED-NC v2.1 or v2.2. The energy saving benefits of these types of systems may be applied to EAc1 calculations. Applicable Internationally.

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